soffit over existing stucco...i looked at many homes that look bad.. should i cut away 1 or 2 inches of stucco ?

Just to clarify: the walls are stuccoed higher than the J-trim level? What's behind the stucco, anyway? You are going to need a board (perhaps a 2x2) to mount the J-trim anyway and I would be very cautious about laying it right ontop of stucco, not to mention it's against the code in most places though perhaps not everywhere. I would strip the stucco down and screw the J-trim board to the framing. I imagine this is the 1-2" cut you're talking about. It's going to be a tad wider than 2"  though - you'd need to give yourself some space to position and level the board.  

So, yes I would do both: cut the stucco and add a board under the J-trim.